EXHIBIT(a)(4)
$1,300,000 CREDIT FACILITY
AND
TERM LOAN AGREEMENT
This Agreement, dated as of March 1, 2004, is entered into by and
between: SP Millennium L.L.C., a Washington limited liability company
("Borrower"), whose address is:
Borrower: SP Millennium L.L.C.
c/o SP Investments, Inc.
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Attn: ▇▇▇▇ ▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and Madrona Ridge L.L.C., a Washington limited liability company ("Lender"),
whose address is:
Lender: Madrona Ridge L.L.C.
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▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
RECITALS
A. Lender has agreed to make a loan to Borrower in an amount and for the
purpose set forth below.
B. The parties hereto wish to define certain of their rights and
obligations with respect to the loan and to set forth the terms and conditions
of the loan.
AGREEMENTS
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein and in all other documents evidencing, securing, or otherwise
relating to the Loan, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS
1.1 TERMS DEFINED
As used herein, the following terms have the meanings set forth below:
"Affiliate" means a Person that now or hereafter, directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with Borrower. A Person shall be deemed to control a corporation,
partnership or other form of entity if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management of such
corporation, partnership or entity whether through the ownership of voting
securities, by contract, or otherwise.
"Agreement" means this credit agreement and includes all amendments to
this Agreement.
"Applicable Law" means all applicable provisions and requirements of all
(a) constitutions, statutes, ordinances, rules, regulations, standards, orders
and directives of any Governmental Bodies, (b) Government Approvals and (c)
orders, decisions, decrees, judgments, injunctions and writs of all courts and
arbitrators, whether such Applicable Laws presently exist, or are modified,
promulgated or implemented after the date hereof.
"Asset" shall mean any partnership interest, note receivable, claim or
other asset acquired or owned by the Borrower and pledged as Collateral as
security for the Funding pursuant to the Agreement.
"Borrower" means SP Millennium L.L.C. ("SPM"), a Washington state
limited liability company.
"Borrowing Notice" has the meaning set forth in Section 4.6(a) hereof.
"Business Day" means any day on which dealings in deposits in United
States dollars are conducted in the London Interbank Market, other than
Saturday, Sunday or a day on which national banks in Seattle, Washington are
authorized or required by law to be closed.
"Claims" has the meaning set forth in Section 10.12 hereof.
"Collateral" means all the property, real or personal, tangible or
intangible, now owned or hereafter acquired, in which Lender has been or is to
be granted a security interest by Borrower or any other Person, to secure the
obligations of Borrower to Lender.
"Collateral Documents" means all security agreements, pledge agreements,
commercial pledge and security agreements, deeds of trust, mortgages, financing
statements and other instruments, agreements and documents now or hereafter in
existence, whereby Borrower or any other Person has granted Lender a security
interest
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in any portion of the assets of the grantor, and includes all renewals,
replacements and amendments of the Collateral Documents.
"Default" means any condition or event that constitutes an Event of
Default or with the giving of notice or lapse of time or both would, unless
cured or waived, become an Event of Default.
"Funding" means the disbursement of the proceeds of the Loan.
"Indebtedness" means all items that in accordance with generally
accepted accounting principles would be included in determining total
liabilities as shown on the liabilities side of the balance sheet as of the date
that "Indebtedness" is to be determined and in any event includes liabilities
secured by any mortgage, deed of trust, pledge, lien, or security interest on
property owned or acquired, whether or not such a liability has been assumed,
and the guaranties, endorsements (other than for collection in the ordinary
course of business) and other contingent obligations with regard to the
obligations of other Persons.
"Loan Documents" means this Agreement, the Note and the Collateral
Documents, together with all other agreements, instruments and documents arising
out of or relating to this Agreement or the Loan, and includes all renewals,
replacements and amendments thereof.
"Loan" means the Term Loan and includes all renewals, replacements and
amendments thereof.
"Loan Closing" shall mean the point in time when the Agreement has been
mutually executed and all conditions precedent to Funding have been satisfied.
"Note" means the Term Note and includes all renewals, replacements and
amendments thereof.
"Participant" means any Person to which Lender sells a participation in
the Loan.
"Person" means any individual, partnership, limited partnership, limited
liability company, limited liability partnership, joint venture, firm,
corporation, association, trust or other enterprise or any Governmental Body.
"Prime Rate" means the rate published, from time to time, by the Wall
Street Journal. If such published rate is unavailable, then Prime Rate shall
mean the rate of interest announced by U. S. Bank from time to time, as its
reference rate.
"Reference Borrowing Rate" means the greater of (a) the Reference Rate
plus three percent (3%) per annum or (b) twelve percent (12%) per annum.
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"Reference Rate" shall equal the Prime Rate. For purposes of this
Agreement, each time the Reference Rate changes, a contemporaneous change may
occur in the Reference Borrowing Rate, effective upon the announcement or
publication of any such change in rate. Lender shall not be obligated to notify
Borrower of any change in the Reference Rate; however, the Reference Rate is
available upon inquiry of Lender.
"Term Loan" has the meaning set forth in Section 2.1 hereof and includes
all renewals, replacements and amendments of the Term Loan.
"Term Note" has the meaning set forth in Section 2.3 hereof and includes
all renewals, replacements and amendments of the Term Note.
1.2 ACCOUNTING TERMS
Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder shall be made, and
all financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles consistently applied.
1.3 RULES OF CONSTRUCTION
Unless the context otherwise requires, the following rules of
construction apply to the Loan Documents:
(a) Words in the singular include the plural and in the plural
include the singular.
(b) Provisions of the Loan Documents apply to successive events and
transactions.
(c) In the event of any inconsistency between the provisions of this
Agreement and the provisions of any of the other Loan Documents, the provisions
of this Agreement govern.
1.4 INCORPORATION OF RECITALS AND EXHIBITS
The foregoing recitals are incorporated into this Agreement by
reference. All references to "Exhibits" contained herein are references to
exhibits attached hereto, the terms and conditions of which are made a part
hereof for all purposes.
ARTICLE II. TERM LOAN
2.1 TERM LOAN COMMITMENT
Subject to and upon the terms and conditions set forth herein and in
reliance upon the representations, warranties and covenants of Borrower
contained herein or made
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pursuant hereto, Lender will make a loan to Borrower within ten days of request
by Borrower to Lender, but such loan shall not exceed $1,300,000 (the "Loan" or
"Term Loan"). The principal of the Term Loan shall equal the total Indebtedness
under the Term Loan, inclusive of associated costs.
2.2 USE OF PROCEEDS
The proceeds of the Term Loan shall be used by Borrower to fund the
purchase by Borrower of limited partnership units in Urban Improvement Fund
Limited-1974 (Urban Fund 1974"). The proceeds of the Term Loan shall not be used
for personal, family or household purposes or to purchase or carry any margin
stock (within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System) or to extend credit to others for the purpose of
purchasing or carrying any margin stock.
2.3 THE TERM NOTE
The Term Loan shall be evidenced by a promissory note in the form
attached hereto as Exhibit A (the "Term Note").
2.4 INTEREST
2.4.1 Note Rate. The outstanding principal balance of the Term Loan,
together with any collection costs, attorney's fees, and other advances made by
Lender under the Term Loan, will accrue monthly interest calculated at the
Reference Borrowing Rate.
2.4.2 Default Rate. Upon the occurrence of any Event of Default, and
so long as such Event of Default is continuing, interest shall accrue on the
outstanding principal balance of the Term Loan, together with any other advances
by Lender, at an annual rate equal to six percent (6%) per annum plus the
Reference Borrowing Rate (the "Default Rate"). Accrual of interest at the
Default Rate is designed to compensate Lender for certain damages caused by such
default, including the additional expenses in servicing the Term Loan, the loss
to Lender of the money due, and the frustration to Lender in meeting its other
financial commitments. However, the accrual and payment of interest at the
Default Rate shall not constitute a waiver of Lender's right to demand an
immediate cure of such default or to pursue any other default remedy.
2.4.3 Calculation of Interest. All interest shall be calculated by
applying the applicable interest rate over a year of 360 days, times the amount
on which the interest is to accrue, times the actual number of days that amount
is outstanding. For the month of Loan Closing and Funding, interest shall be
paid on the last day of the month calculated by multiplying (a) the average
outstanding balance of the Term Loan during the preceding month times (b) the
Reference Borrowing Rate as of the date of Funding. Any payment not received by
5:00 p.m. Pacific Time will be treated as having been received by Lender on the
next day, and interest shall continue to accrue until the next day. If
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interest is not paid on a monthly basis as required, it shall be compounded on
the first day of each month.
2.4.4 Applicable Law. Notwithstanding provision contained herein or in
the Term Note, the total liability of Borrower for payment of interest pursuant
hereto, including late charges, shall not exceed the maximum amount of interest
permitted by Applicable Law to be charged, collected or received from Borrower.
If any payments by Borrower include interest in excess of that maximum amount,
Lender shall apply the excess first to reduce the unpaid balance of the Term
Loan, then to reduce the balance of any other Indebtedness of Borrower to
Lender. If there is not such Indebtedness, the excess shall be returned to
Borrower.
2.5 LATE CHARGE.
At its option, and without waiver of Lender's right to declare the
entire sum of principal and interest due hereunder immediately payable upon an
Event of Default, Lender shall be entitled to a late charge equal to five
percent (5%) of the amount of any monthly interest or principal payment not
received by the 10th day after the day on which such payment first became due.
2.6 PREPAYMENT.
Borrower may prepay the Term Loan in whole or in part at any time or
times without premium or penalty of any kind, provided that Borrower shall have
performed all other obligations under the Term Loan.
2.7 CREDIT FACILITY FEE.
Concurrently with the Funding of the Term Loan, Borrower shall pay
Lender a nonrefundable fee for the Term Loan in the amount of 1% of the Funding
amount.
2.8 FUNDING PROVISION.
Under the Term Loan, Lender shall make the Funding secured by the Asset
in the amount requested by Borrower, but not to exceed the lesser of (i)
Borrower's actual cash investment in the Asset, or (ii) fifty percent (50%) of
Borrower's Equity in the Asset. For the Funding, Borrower shall submit a
Borrowing Notice representing Borrower's cost and calculation of Borrower's
Equity related to the Asset in the form attached hereto as Exhibit B, with
attached copies of the confirmations from the Urban Fund Partnership's transfer
agent of the transfer of units to be purchased by Borrower with such Funding.
Upon Lender's approval of the Borrowing Notice, Lender will advance the Funding.
2.9 REPAYMENT
2.9.1 Month of Funding. If the Funding occurs before the end of a
month, the Borrower shall pay the Lender, at the end of such month, interest on
the principal amount
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of the Term Loan accrued through the end of such month calculated at the
Reference Borrowing Rate as of the date of the Funding.
2.9.2 Minimum Monthly Payment. Except as set forth in Section 2.9.1
above, the minimum monthly payment shall be based on the principal amount of the
Term Loan as of the date of its Funding. Based on the principal amount of the
Term Loan and the Reference Borrowing Rate as of the date of the Funding, a
Minimum Monthly Payment Amount ("MMPA") will be determined. The MMPA shall equal
the monthly payment amount necessary to fully amortize the Term Loan based on
the Reference Borrowing Rate as of date of the Funding over forty-eight equal
monthly payments.
2.9.3 Term Loan Term. Commencing at the end of the first full month
after the Funding and every month thereafter, until the Term Loan has been fully
amortized, or until April 30, 2008, whichever is the first to occur, the
Borrower shall pay the Lender at least the MMPA. The Borrower shall pay the MMPA
monthly regardless of changes in the Reference Borrowing Rate occurring during
the term of the Term Loan. All remaining principal and any accrued but unpaid
interest or other obligations of Borrower shall be paid no later than April 30,
2008.
2.9.4 Mandatory Repayments. Borrower shall make mandatory repayments
of principal as provided under Section 4.7.
ARTICLE III. (ARTICLE NOT USED)
ARTICLE IV. GENERAL PROVISIONS APPLICABLE TO THE LOAN
4.1 MANNER OF PAYMENT
All sums payable to Lender pursuant to this Agreement shall be paid
directly to Lender in immediately available United States funds. Whenever any
payment to be made hereunder or on the Note becomes due and payable on a day
that is not a Business Day, such payment may be made on the next succeeding
Business Day and such extension of time shall in such case be included in
computing interest on such payment.
4.2 STATEMENTS
Lender shall send Borrower statements of all amounts due hereunder; the
statements shall be considered correct and conclusively binding, absent manifest
error, on Borrower unless Borrower notifies Lender to the contrary within thirty
(30) days of receipt of any statement that Borrower claims to be incorrect.
Borrower agrees that accounting entries made by Lender with respect to
Borrower's loan accounts shall constitute evidence of the Funding and payments
made on the Loan. Without limiting the methods by which Lender may otherwise be
entitled by Applicable Law to make demand for payment of the Loan upon Borrower,
Borrower agrees that any statement, invoice, or payment notice from Lender to
Borrower with respect to any principal or interest obligations of Borrower to
Lender shall be deemed to be a demand for payment in
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accordance with the terms of such statement, invoice or payment notice. Under no
circumstances shall a demand by Lender for partial payment of principal or
interest or both be construed as a waiver by Lender of its right thereafter to
demand and receive payment (in part or in full) of any remaining principal or
interest obligation.
4.3 BOOK ENTRY LOAN ACCOUNT
Borrower on behalf of Lender shall establish a book entry loan account
for the Loan in which Borrower will make entry of the Funding pursuant to the
terms of this Agreement. Borrower will also record in the applicable loan
account, in accordance with customary banking practices, all interest and other
charges, expenses and other items properly chargeable to Borrower, if any,
together with all payments made by Borrower on account of the Indebtedness
evidenced by Borrower's loan account and all other sums credited to the loan
account. The balance of Borrower's loan account shall reflect the amount of
Borrower's Indebtedness to Lender from time to time by reason of advances,
charges, payments or credits. Borrower shall make all books and records relating
to the book entry loan account available to Lender on an "as requested" basis.
4.4 REFERENCE BORROWING RATE PROVISIONS
(a) Borrower may obtain Reference Borrowing Rate quotes from Lender
on any Business Day.
(b) Notwithstanding any other term of this Agreement, if an Event of
Default hereunder has occurred and is continuing, the Term Loan shall not bear
interest at the Reference Borrowing Rate, but rather shall bear interest at the
Default Rate, subject to the provisions of Section 2.4.2 hereof.
(c) Nothing contained in this Agreement shall be construed to
prejudice Lender's right to decline to make the requested Funding provided that
Lender acts in accordance with the provisions of this Agreement.
4.5 EXTENSIONS, RENEWALS AND MODIFICATIONS
Any extensions, renewals and modifications of the Loan shall be governed
by the terms and conditions of this Agreement and the other Loan Documents
unless otherwise agreed to in writing by Lender and Borrower.
4.6 FUNDING
(a) Lender is hereby authorized by Borrower to make the Funding
under the Loan upon receipt of a written request therefore ("Borrowing Notice")
from Borrower or ▇▇▇▇ ▇▇▇▇▇▇, each of whom is authorized to request the Funding
and direct the disposition of the Funding until written notice by Borrower of
the revocation of such authority is received by Lender. The Funding shall be
conclusively presumed to have been made to or for the benefit of Borrower when
made in accordance with such a request and direction
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for disposition or when such Funding is deposited to the credit of the account
of Borrower at any bank with directions to credit the same to the account of
Borrower at such bank, regardless of whether persons other than those authorized
hereunder to make request for the Funding have authority to draw against any
such account.
(b) Borrower acknowledges that Lender cannot effectively determine
whether the request for the Funding is valid, authorized or authentic. It is
nevertheless important to Borrower that it may make its request for the Funding
in accordance with Section 4.6 hereof. Therefore, to induce Lender to lend funds
in response to such request and in consideration for Lender's agreement to
receive and consider such request, Borrower assumes all risk of the validity,
authenticity and authorization of such request, whether or not the individual
making such request has authority to request the Funding and whether or not the
aggregate sum owing exceeds the maximum principal amount referred to above.
Lender shall not be responsible under principles of contract, tort, or otherwise
for the amount of an unauthorized or invalid Funding; rather, Borrower agrees to
repay any sums with interest as provided herein.
(c) The Funding of the Term Loan pursuant to this Section 4.6 shall
be deemed to have been requested by Borrower under the terms of the Term Note.
Lender shall not be required to make the Funding to Borrower under this Section
4.6(c) if (a) as a result of such Funding, the aggregate outstanding principal
amount of the Term Loan would exceed the amount of the commitment under the Term
Note, (b) the Funding would otherwise result in a breach of any of Borrower's
obligations to Lender, or (c) there exists an Event of Default.
4.7 Mandatory Principal Repayments. In the event the Borrower
receives a payment resulting from a Capital Transaction related to an Asset upon
which the Funding has been based, the Borrower shall make a mandatory repayment
of Loan principal to Lender as provided herein.
4.7.1 Capital Transactions and Liquidity Events. A Capital Transaction
shall mean a Liquidity Event related to an Asset. Liquidity Events involve the
sale of the Asset or the sale or refinancing of any property directly or
indirectly owned by Borrower or any other capital event which result in cash
distributions to Borrower pursuant to its ownership rights related to the Asset.
4.7.2 Timing and Amount of Payment. Within three (3) days of its
receipt of any proceeds resulting from a Capital Transaction, Borrower shall pay
Lender an amount which equals one hundred and ten percent (110%) of the Funding
(or proportionate share thereof) relating to the Capital Transaction Asset (or
portion thereof), except in the circumstance of a refinancing of a property
directly or indirectly owned by Borrower, in which case Borrower shall pay
Lender the lesser of (a) one hundred and ten percent (110%) of the Funding (or
proportionate share thereof) originally related to the Capital Transaction Asset
(or portion thereof) or (b) one hundred percent (100%) of proceeds received by
Borrower attributable to the Capital Transaction.
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ARTICLE V. CONDITIONS PRECEDENT FOR FUNDING UNDER THE LOAN
5.1 CONDITIONS PRECEDENT FOR FUNDING
Lender shall not be required to make the Funding under the Loan unless
or until the following conditions have been fulfilled to the satisfaction of
Lender:
(a) Lender shall have received this Agreement and the Note, duly
executed and delivered by the respective parties thereto.
(b) Lender shall have received a written request for Funding (the
"Borrowing Notice") from Borrower.
(c) Lender shall have received, duly executed and delivered by
Borrower, a commercial pledge and security agreement in the form attached hereto
as Exhibit C for the Asset related to the Borrowing Notice.
(d) Lender shall have received, duly executed and delivered by
Borrower a Form UCC-l in the form satisfactory to Lender's counsel.
(g) All representations and warranties of Borrower contained herein
or otherwise made in writing in connection herewith shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on and as of the date of the Funding.
(h) There shall be executed and delivered to Lender such further
instruments, agreements and documents, as may be reasonably necessary or proper
in the opinion of Lender to confirm the obligations of Borrower to Lender
hereunder, the grant of security therefore and the proper use of the proceeds of
the Funding.
ARTICLE VI. AFFIRMATIVE COVENANTS
Borrower hereby covenants and agrees that so long as this Agreement is
in effect, and until the Loan, together with interest thereon, and all other
obligations incurred hereunder are paid or satisfied in full, Borrower shall:
6.1 FINANCIAL DATA
Keep its books of account in accordance with generally accepted
accounting principles, consistently applied, and furnish to Lender:
(a) As soon as practicable and in any event within 90 days after the
close of each calendar year, financial statements of Borrower for each such
year, in a form reasonably acceptable to Lender and certified by Borrower to be
true and correct, as well
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as copies of Borrower's federal income tax return each year within 30 days after
the filing thereof. Borrower shall provide Lender with a copy of its independent
certified public accountants' management letter or other similar report or
correspondence to Borrower.
(b) With reasonable promptness, such other information regarding the
business, operations and financial condition of Borrower as Lender may from time
to time reasonably request.
6.2 MAINTENANCE OF PROPERTIES
Keep Borrower's properties in good repair and in good working order and
condition, in a manner consistent with past practices and comparable to industry
standards; from time to time make all appropriate and proper repairs, renewals,
replacements, additions and improvements thereto; and keep all equipment that
may now or in the future be subject to compliance with any Applicable Laws in
full compliance with such Applicable Laws.
6.3 PAYMENT OF CHARGES
Duly pay and discharge all material (a) taxes, assessments, levies and
any other charges of Governmental Bodies imposed on or against Borrower or its
property or assets, or upon any property leased by Borrower, prior to the date
on which penalties attached thereto, unless and to the extent only that such
taxes assessments, levies and any other charges of Governmental Bodies, after
written notice thereof having been given to Lender, are being contested in good
faith and by appropriate proceedings; (b) claims allowed by Applicable Laws,
whether for labor, materials, rentals, or anything else, which could, if unpaid,
become a lien or charge upon Borrower's property or assets or adversely affect
the facilities or operations of Borrower (unless and to the extent only that the
validity thereof is being contested in good faith and by appropriate proceedings
after written notice thereof has been given to Lender); (c) trade bills in
accordance with the terms thereof or generally prevailing industry standards;
and (d) other Indebtedness heretofore or hereafter incurred or assumed by
Borrower, unless such Indebtedness be renewed or extended. In the event Borrower
is contesting any charge as allowed above, Borrower shall establish adequate
reserves against possible liability therefore.
6.4 INSURANCE
(a) Maintain insurance upon Borrower's properties and business
insuring against such risks as Lender shall reasonably determine from time to
time.
(b) From time to time upon request by Lender, promptly furnish or
cause to be furnished to Lender evidence, in form and substance satisfactory to
Lender, of the maintenance of all insurance, indemnities, or bonds required by
this Section 6.4 or by any license, lease, or other agreement to be maintained,
including but not limited to such originals or copies as Lender may request of
policies, certificates of insurance, riders, assignments and endorsements
relating to the insurance and proof of premium payments.
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6.5 MAINTENANCE OF RECORDS
Keep at all times books of account and other records in which full, true
and correct entries will be made of all dealings or transactions in relation to
the business and affairs of Borrower.
6.6 INSPECTION
Allow any representative of Lender to visit and inspect any of
Borrower's properties, to examine the books of account and other records and
files of Borrower, to make copies thereof and to discuss the affairs, business,
finances and accounts of Borrower with Borrower's officers, employees and
accountants, all at such reasonable times and as often as Lender may desire.
This right of inspection shall specifically include Lender's collateral and
financial examinations.
6.7 ENTITY EXISTENCE
Maintain and preserve the existence of Borrower as a limited liability
company.
6.8 NOTICE OF DISPUTES AND OTHER MATTERS
Promptly give written notice to Lender of:
(a) Any citation, order to show cause, or other legal process or
order that could have a material adverse effect on Borrower.
(b) Any actions, proceedings, or claims of which Borrower may have
notice that may be commenced or asserted against Borrower in which the amount
involved is $100,000 or more and is not fully covered by insurance or which, if
not solely a claim for monetary damages, could, if adversely determined, have a
material adverse effect on Borrower.
6.9 EXCHANGE OF NOTE
Upon receipt of a written notice of loss, theft, destruction, or
mutilation of the Note, and upon surrendering such Note for cancellation if
mutilated, execute and deliver a new Note or a Note of like tenor in lieu of
such lost, stolen, destroyed or mutilated Note. Any Note issued pursuant to this
Section 6.9 shall be dated so that neither gain nor loss of interest shall
result there from.
6.10 MAINTENANCE OF LIENS
At all times maintain the liens and security interests provided under or
pursuant to this Agreement and the Collateral Documents as valid and perfected
first liens and security interests on the property and assets intended to be
covered thereby. Except as contemplated under Section 7.2, hereof Borrower shall
take all action requested by
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Lender necessary to assure that Lender has valid and exclusive liens and
security interests in all Collateral.
6.11 OTHER AGREEMENTS
Comply with all covenants and agreements set forth in or required
pursuant to any of the other Loan Documents.
6.12 FURTHER ASSURANCES
Within five days of request by Lender, duly execute and deliver or cause
to be duly executed and delivered to Lender such further instruments, agreements
and documents and do or cause to be done such further acts as may be necessary
or proper in the reasonable opinion of Lender to carry out more effectively the
provisions and purposes of this Agreement and the other Loan Documents.
ARTICLE VII. NEGATIVE COVENANTS
Borrower covenants and agrees that until the Loan, together with
interest thereon, and all other obligations incurred hereunder are paid or
satisfied in full, Borrower shall not, without the prior written consent of
Lender:
7.1 OTHER INDEBTEDNESS
Create, incur, assume, or suffer to exist, contingently or otherwise,
any unsecured Indebtedness with recourse to the Collateral except (a)
Indebtedness represented by the Note; (b) accounts and other current payables
arising from the ordinary course of business; (c) additional Indebtedness
outstanding or committed to at any time (including but not limited to
indebtedness evidenced by notes, bonds, debentures, leases, purchase agreements
and other contractual obligations) not in excess of an aggregate amount at any
one time outstanding of $500,000. Notwithstanding clause (c) above, Borrower
shall not guarantee or become contingently liable for the obligation of any
Person except as provided for herein. Except as set forth in Section 7.2 hereof,
none of the additional indebtedness permitted by this Section 7.1 shall be
secured by the Collateral.
7.2 LIENS
Contract, create, incur, assume, or suffer to exist any mortgage,
pledge, lien, or other charge or encumbrance of any kind (including but not
limited to the charge upon property purchased under conditional sales or other
title retention agreements) upon or grant any interest in any of the Collateral,
except (a) liens granted pursuant to this Agreement or the Collateral Documents;
(b) liens in connection with worker's compensation, unemployment insurance, or
other social security obligations; (c) liens for taxes, assessments, levies, or
charges of Governmental Bodies imposed upon Borrower or its property,
operations, income, products, or profits that are not at the time due or payable
or for which, if the validity thereof is being contested in good faith by legal
or administrative proceedings, appropriate reserves have been established; (d)
liens that are
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not consensual arising by operation of law out of judgments or awards with
regard to which Borrower shall be prosecuting an appeal in good faith and for
which a stay of execution has been issued and appropriate reserves established;
and (e) the liens existing as of the date of this Agreement.
7.3 CHANGE IN DOCUMENTS
Amend, supplement, terminate, or otherwise modify in any material way
Borrower's articles of formation, contracts, or other documents delivered to
Lender hereunder or executed in connection herewith.
7.4 CONTROL
Enter into any agreement (other than employment agreements) with any
Person that confers upon such Person the right or authority to control or direct
a major portion of the business or assets of Borrower.
ARTICLE VIII. REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement and to make the
Loan as herein provided, Borrower hereby makes the following representations,
covenants and warranties, all of which shall survive the execution and delivery
of this Agreement and shall not be affected or waived by any inspection or
examination made by or on behalf of Lender:
8.1 ENTITY STATUS
Borrower is a limited liability company organized and validly existing
under the laws of the state of Washington. Borrower has the power and authority
to own its property and assets and to transact the business in which it is
engaged or presently proposes to engage. Borrower is qualified to do business in
all states except where the failure to be qualified could not have a material
adverse effect on Borrower.
8.2 POWER AND AUTHORITY
Borrower has the power to execute, deliver and carry out the terms and
provisions of this Agreement and each of the Loan Documents, and has taken all
necessary action to authorize the execution, delivery and performance of this
Agreement and the other Loan Documents, and the borrowings hereunder. The making
and delivery of the Note and all Loan Documents and instruments issued or to be
issued hereunder, when executed and delivered pursuant hereto, constitute or
will constitute the authorized, valid and legally binding obligations of
Borrower enforceable in accordance with their respective terms.
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8.3 NO VIOLATION OF AGREEMENTS
Borrower is not in default under any material provision of any agreement
to which it is a party or in violation of any Applicable Laws. The execution and
delivery of this Agreement, the Note, the other Loan Documents and the
instruments incidental hereto; the consummation of the transactions herein or
therein contemplated; and compliance with the terms and provisions hereof or
thereof by Borrower (a) will not violate any material Applicable Law, and (b)
will not conflict or be inconsistent with; result in any breach of any of the
material terms, covenants, conditions, or provisions of; constitute a default
under; or result in the creation or imposition of (or the obligation to impose)
any lien, charge, or encumbrance upon any of the property or assets of Borrower
pursuant to the terms of any material agreement or other instrument to which
Borrower is a party or by which Borrower may be bound, or to which Borrower may
be subject.
8.4 RECORDING AND ENFORCEABILITY
Neither the articles of formation, bylaws, or other applicable corporate
or entity documents of Borrower nor other agreements require recording, filing,
registration, notice, or other similar action in order to insure the legality,
validity, binding effect, or enforceability against all Persons of this
Agreement, the Note, or other Loan Documents executed or to be executed
hereunder, other than filings or recordings that may be required under the
Uniform Commercial Code.
8.5 LITIGATION
There are no actions, suits, or proceedings pending or threatened
against or affecting Borrower that could have a material adverse effect on
Borrower or the Collateral. Borrower is not in default under any material
provision of any Applicable Law which could have a material adverse effect on
Borrower or on the Collateral.
8.6 GOOD TITLE TO PROPERTIES
Borrower have good and marketable title to, or a valid leasehold
interest in, its property and assets, subject to no liens, mortgages, pledges,
encumbrances, or charges of any kind, except those permitted under the
provisions of Section 7.2 hereof.
8.7 FINANCIAL STATEMENTS
The (a) unaudited financial statements of Borrower dated December 31,
2003, and all schedules and notes included in such financial statements that
have heretofore been delivered to Lender are true and correct in all material
respects and present fairly (i) the financial position of Borrower as of the
date of said statements and (ii) the results of operations of Borrower for the
periods covered thereby. All such financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied.
There has been no material adverse change in the operations,
15
business, property, assets, or condition (financial or otherwise) of Borrower
since December 31, 2003.
8.8 OUTSTANDING INDEBTEDNESS
Other than current trade payables, Borrower does not have any
Indebtedness, including but not limited to Indebtedness to Affiliates, that is
not listed on the unaudited financial statements of Borrower dated December 31,
2003.
8.9 DISCLOSURE
To the best of Borrower's knowledge, the exhibits hereto, the financial
information and statements referred to in Section 8.7 hereof, any certificate,
statement, report or other document furnished to Lender by Borrower or any other
Person on behalf of Borrower in connection herewith or in connection with any
transaction contemplated hereby and this Agreement do not contain any untrue
statements of material fact or omit to state any material fact necessary in
order to make the statements contained therein or herein not misleading.
ARTICLE IX. EVENTS OF DEFAULT; REMEDIES
9.1 EVENTS OF DEFAULT
"Event of Default", wherever used herein, means any one of the following
events (whatever the reason for the Event of Default, whether it shall relate to
one or more of the parties hereto and whether it shall be voluntary or
involuntary or be pursuant to or affected by operation of Applicable Law):
(a) If Borrower fails to pay the principal of or any installment of
interest on either of the Note within five business days from the date when due,
whether at scheduled maturity, by acceleration or otherwise; or
(b) If any Indebtedness of Borrower for money borrowed or credit
extended in excess of $200,000 becomes or is declared due and payable (after any
applicable grace period) prior to the stated maturity thereof or is not paid as
and when it becomes due and payable, or if any event occurs which constitutes an
event of default under any instrument, agreement, or evidence of Indebtedness
relating to any such obligation of Borrower; or
(c) If any representation or warranty (i) made by Borrower in this
Agreement or (ii) made by Borrower or any other Person in any document,
certificate, or statement furnished pursuant to this Agreement or in connection
herewith, is false or misleading in any material respect; or
(d) If Borrower fails to observe or perform any term, covenant or
agreement to be performed or observed pursuant to Articles VI and VII hereof; or
16
(e) If Borrower fails to observe or perform (not otherwise specified
in this Article IX) any term, covenant or agreement to be performed or observed
pursuant to the provisions of this Agreement, the other Loan Documents, or any
other agreement incidental hereto and such default is not cured pursuant to
Section 9.2(b); or
(f) If Borrower suspends or discontinues its business, or if
Borrower makes an assignment for the benefit of creditors or a composition with
creditors, is unable or admits in writing its inability to pay its debts as they
mature, files a petition in bankruptcy, becomes insolvent (howsoever such
insolvency may be evidenced), is adjudicated insolvent or bankrupt, petitions or
applies to any tribunal for the appointment of any receiver, liquidator, or
trustee of or for it or any substantial part of its property or assets,
commences any proceeding relating to it under any Applicable Law of any
jurisdiction whether now or hereafter in effect relating to bankruptcy,
reorganization, arrangement, readjustment of debt, receivership, dissolution, or
liquidation; or
(g) If any material adverse change in the business or financial
condition of Borrower occurs, or if any event occurs that materially increases
Lender's risk or materially impairs the Collateral.
9.2 ACCELERATION; REMEDIES
(a) Upon the occurrence of any Event of Default or at any time
thereafter, if any Event of Default is then continuing, Lender may, by written
notice to Borrower, declare the entire unpaid principal balance or any portion
of the principal balance of all or any of the Note and interest accrued thereon
to be immediately due and payable by the maker thereof; and such principal and
interest shall thereupon become and be immediately due and payable, without
presentation, demand, protest, notice of protest, or other notice of dishonor of
any kind, all of which are hereby expressly waived by Borrower. Notwithstanding
the foregoing, upon the occurrence of any Event of Default described in Section
9.1(f) hereof, the entire unpaid principal balance of the Loan and interest
accrued thereon shall be immediately and without notice be due and payable by
the maker thereof without presentation, demand, protest, notice of protest, or
other notice of dishonor of any kind, all of which are hereby expressly waived
by Borrower. In either event, Lender may proceed to protect and enforce its
rights hereunder or realize on any or all security granted pursuant hereto in
any manner or order it deems expedient without regard to any equitable
principles of marshaling or otherwise. All rights and remedies given by this
Agreement, the Note and the other Loan Documents are cumulative and not
exclusive of any thereof or of any other rights or remedies available to Lender;
no course of dealing between Borrower and Lender or any delay or omission in
exercising any right or remedy shall operate as a waiver of any right or remedy;
and every right and remedy may be exercised from time to time and as often s
deemed appropriate by Lender.
(b) If any event or condition described in Section 9.1(e) occurs and
is curable, it may be cured (and no Event of Default will have occurred) if
Borrower after receiving written notice from Lender demanding cure of such
default: (i) cures the default within 30 days, or (ii) if the cure requires more
than 30 days, then immediately initiates steps
17
which Lender deems in Lender's sole discretion to be sufficient to cure the
Default and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical, but in
no event later than 90 days after the written notice from Lender previously
referred to in this sentence.
ARTICLE X. MISCELLANEOUS
10.1 NOTICES
All notices, requests, consents, demands, approvals and other
communications hereunder shall be deemed to have been duly given, made, or
served if made in writing and delivered personally, sent via facsimile, or
mailed by first-class mail, postage prepaid, to the respective parties to this
Agreement as follows:
(a) If to Borrower:
SP Millennium L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Facsimile #: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Lender:
Madrona Ridge L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Facsimile #: (▇▇▇) ▇▇▇-▇▇▇▇
The designation of the person to be so notified or the address of such persons
for the purposes of such notice may be changed from time to time by similar
notice in writing, except that any communication with respect to a change of
address shall be deemed to be given or made when received by the party to whom
such communication was sent.
10.2 PAYMENT OF EXPENSES
In addition, if there shall occur any Default or Event of Default,
Lender shall be entitled to recover any costs and expenses incurred in
connection with the preservation of rights under, and enforcement of, the Loan
Documents, whether or not any lawsuit or arbitration proceeding is commenced, in
all such cases, including, without limitation, reasonable attorneys' fees and
costs (including the allocated fees of internal counsel). Costs and expenses as
referred to above, shall include, without limitation, a reasonable hourly rate
for collection personnel, whether employed in-house or otherwise, overhead costs
as reasonably allocated to the collection effort and all other expenses actually
incurred.
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10.3 SETOFF
Borrower hereby pledges and gives to Lender, and any Participant, for
the amount of all past, present and future Indebtedness of Borrower of Lender, a
lien and security interest in the balance of any deposit account maintained by
Borrower at Lender or any Participant. In the case of Borrower's Default
hereunder, Borrower hereby authorizes Lender or any such Participant at Lender's
sole option, at any time and from time to time, to apply to the payment of all
or any portion of the Loan or other Indebtedness of Borrower to Lender, any
deposit balance or balances now or hereafter in the possession of Lender or such
Participant that belong to or are owed to Borrower.
10.4 WAIVER OF SETOFF
In the event that Lender sells all or any portion of the Loan to any
Participant, Borrower hereby waives the right to interpose any setoff,
counterclaim, or cross-claim (other than compulsory counterclaims or
cross-claims) in connection with any litigation or dispute under this Agreement,
regardless of the nature of such setoff, counterclaim, or cross-claim.
10.5 NO WAIVER
No failure or delay on the part of Lender or the holder of the Note in
exercising any right, power, or privilege hereunder and no course of dealing
between Borrower and Lender or the holder of the Note shall operate as a waiver
thereof.
10.6 ENTIRE AGREEMENT AND AMENDMENTS
This Agreement represents the entire agreement between the parties
hereto with respect to the Loan and the transactions contemplated hereunder and,
except as expressly provided herein, shall not be affected by reference to any
other documents. This Agreement, or any provision hereof, may not be changed,
waived, discharged, or terminated orally, but only by an instrument in writing,
signed by the party against whom enforcement of the change, waiver, discharge,
or termination is sought.
10.7 BENEFIT OF AGREEMENT
This Agreement is binding upon and insures to the benefit of Borrower
and Lender and their successors and assigns and all subsequent holders of the
Note or any portion thereof. Borrower expressly acknowledges that Lender is not
prohibited or restricted from assigning rights or participations hereunder or
any portion thereof to another Person. Borrower, however, is precluded from
assigning any of its respective rights or delegating any of its obligations
hereunder or under any of the other agreements between Borrower and Lender
without the prior written consent of Lender.
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10.8 SEVERABILITY
If any provision of this Agreement or any of the Loan Documents is held
invalid under any Applicable Laws, such invalidity shall not affect any other
provision of this Agreement that can be given an effect without the valid
provision and, to this end, the provisions hereof are severable.
10.9 DESCRIPTIVE HEADINGS
The descriptive headings of the several sections of this Agreement are
inserted for convenience only and do not affect the meaning or construction of
any of the provisions hereof.
10.10 GOVERNING LAW
This Agreement and the rights and obligations of the parties hereunder
and under the other Loan Documents shall be construed in accordance with and
shall be governed by the laws of the state of Washington without regard to the
choice of law rules thereof.
10.11 CONSENT TO JURISDICTION, SERVICE AND VENUE
For the purpose of enforcing payment of the Note, performance of the
obligations under the Note, any arbitration award under the other Loan
Documents, or otherwise in connection herewith, Borrower hereby consents to the
jurisdiction and venue of the courts of the state of Washington or of any
federal court located in such state including but not limited to the Superior
Court of Washington for King County and the United States District Court for the
Western District of Washington. Borrower hereby waives the right to contest the
jurisdiction and venue of courts located in King County, Washington, on the
ground of inconvenience or otherwise and waives any right to bring any action or
proceeding against Lender in any court outside King County, Washington. The
provisions of this Section 10.11 do not limit or otherwise affect the right of
Lender to institute and conduct action in any other appropriate manner,
jurisdiction or court.
10.12 ARBITRATION
(a) Either Borrower or Lender may require that all disputes, claims,
counterclaims and defenses, including those based on or arising from any alleged
tort ("Claims") relating in any way to the Loan be settled by binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association and Title 9 of the U.S. Code. All Claims will be subject
to the statutes of limitations that would be applicable if they were litigated.
(b) This provision is void if the Loan, at the time of the proposed
submission to arbitration, is directly secured by real property located outside
of Washington or if the effect of the arbitration procedure (as opposed to any
Claims of Borrower) would be to
20
materially impair Lender's ability to realize on any Collateral pursuant to an
arbitration ruling favorable to Lender.
(c) If arbitration occurs and each party's Claim is less than
$100,000, one neutral arbitrator will decide all issues; if either party's Claim
is more than $100,000, three neutral arbitrators will decide all issues. All
arbitrators will be active Washington State Bar members in good standing. All
arbitration hearings will be held in Seattle, Washington. In addition to all
other powers, the arbitrator or arbitrators shall have the exclusive right to
determine all issues of arbitrability and shall have the authority to issue
subpoenas. Judgment on any arbitration award may be entered in any court with
jurisdiction.
(d) If either party institutes any judicial proceeding relating to
the Loan, that action shall not be a waiver of the right to submit any Claim to
arbitration. In addition, each has the right before, during and after any
arbitration to exercise any number of the following remedies, in any order or
concurrently: (i) setoff, (ii) self-help repossession, (iii) judicial or
nonjudicial foreclosure against real or personal collateral, and (iv)
provisional remedies, including injunction, appointment of a receiver,
attachment, claim and delivery, and replevin.
(e) This arbitration clause cannot be modified or waived by either
party except in writing, which writing must refer to this arbitration clause and
be signed by Borrower and Lender.
10.13 COUNTERPARTS
This Agreement and each of the Loan Documents may be executed in one or
more counterparts, each of which shall constitute an original agreement, but all
of which together shall constitute one and the same instrument.
10.14 STATUTORY NOTICE
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
LAW.
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be
duly executed by the respective, duly authorized signatories as of the date
first above written.
SP Millennium L.L.C. Madrona Ridge L.L.C.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------- ------------------
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇
21
EXHIBITS
Exhibit A Term Note, Section 2.3
Exhibit B Borrowing Notice, Section 2.8
Exhibit C Commercial Pledge and Security Agreement, Section 5.1(c)
22
EXHIBIT A
TO
$1,300,000 CREDIT FACILITY AND TERM LOAN AGREEMENT
TERM NOTE
$___________ (U.S.)
Seattle, Washington
For value received, the undersigned, SP Millennium L.L.C., a Washington
limited liability company ("Borrower"), promises to pay to the order of Madrona
Ridge L.L.C., a Washington limited liability company, ("Lender") at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other place as Lender may
from time to time designate in writing, the sum of
______________________________________________ ($_________), or so much thereof
as may from time to time be disbursed hereunder, in lawful money of the United
States of America, together with interest on the unpaid principal balance from
time to time outstanding hereunder from the date of the first disbursement of
funds hereunder until paid at the rate set forth below.
1. Loan Documents. This Note evidences a loan (the "Loan") from
Lender to Borrower. This Note is issued pursuant to that certain $1,300,000
Credit Facility and Term Loan Agreement (the "Agreement") between the Borrower
and Lender. The terms (including meanings given to defined terms) and conditions
of the Agreement are hereby adopted and incorporated herein. Borrower hereby
agrees to perform and comply with all of the agreements, terms, and conditions
of all of the Loan Documents.
2. Term. The entire outstanding balance of the Note shall be due
and payable no later than April 30, 2008.
3. INTEREST
3.1 Note Rate. The outstanding principal balance of the Loan,
together with any collection costs, attorney's fees, and other advances made by
Lender under the Loan, will accrue monthly interest calculated at the Reference
Borrowing Rate.
3.2 Default Rate. Upon the occurrence of any Event of Default,
and so long as such Event of Default is continuing, interest shall accrue on the
outstanding principal balance of the Loan, together with any other advances by
Lender, at an annual rate equal to six percent (6%) per annum plus the Reference
Borrowing Rate (the "Default Rate"). Accrual of interest at the Default Rate is
designed to compensate Lender for certain damages caused by such default,
including the additional expenses in servicing the Loan, the loss to Lender of
the money due, and the frustration to Lender in meeting its other financial
commitments. However, the accrual and payment of interest at the Default Rate
shall not constitute a waiver of Lender's right to demand an immediate cure of
such default or to pursue any other default remedy.
1
3.3 Calculation of Interest. All interest shall be calculated by
applying the applicable interest rate over a year of 360 days, times the amount
on which the interest is to accrue, times the actual number of days that amount
is outstanding. Interest shall be accrued monthly on the last day of the month
based on the average outstanding balance of the Loan during the preceding month
and the Reference Borrowing Rate as of the last day of the month. Any payment of
interest not received by 5:00 p.m. Pacific Time will be treated as having been
received by Lender on the next day, and interest shall continue to accrue until
the next day. If interest is not paid on a monthly basis as required below, it
shall be compounded on the first day of each month.
3.4 Applicable Law. Notwithstanding provision contained herein,
the total liability of Borrower for payment of interest pursuant hereto,
including late charges, shall not exceed the maximum amount of interest
permitted by Applicable Law to be charged, collected or received from Borrower.
If any payments by Borrower include interest in excess of that maximum amount,
Lender shall apply the excess first to reduce the unpaid balance of Revolving
Loan, then to reduce the balance of any other Indebtedness of Borrower to
Lender. If there is not such Indebtedness, the excess shall be returned to
Borrower.
4. Late Charge. At its option, and without waiver of Lender's right
to declare the entire sum of principal and interest due hereunder immediately
payable upon an Event of Default, Lender shall be entitled to a late charge
equal to five percent (5%) of the amount of any monthly interest or principal
payment not received by the 10th day after the day on which such payment first
became due.
5. REPAYMENT
5.1 Minimum Monthly Payment. Minimum Monthly Payment Amount
("MMPA") shall equal ________________ (the monthly payment amount necessary to
fully amortize the Term Loan based on the then Reference Borrowing Rate over
forty-eight equal monthly payments).
5.2 Term Loan Term. Commencing ______________, 2004, and at the
end of every month thereafter, until the Term Loan has been fully amortized, or
until April 30, 2008, whichever is the first to occur, the Borrower shall pay
the Lender at least the MMPA. The Borrower shall pay the MMPA monthly regardless
of changes in the Reference Borrowing Rate occurring during the term of the Term
Loan. All remaining principal and any accrued but unpaid interest or other
obligations of Borrower shall be paid no later than April 30, 2008.
5.3 Mandatory Repayments. Borrower shall make mandatory
repayments of principal as provided under Section 6.
2
6. Mandatory Principal Repayments. In the event the Borrower
receives a payment resulting from a Capital Transaction related to the Asset (or
portion of the Asset) upon which the Funding has been based, the Borrower shall
make a mandatory repayment of Loan principal to Lender as provided herein.
6.1 Capital Transactions and Liquidity Events. Capital
Transactions shall mean a Liquidity Event related to the Asset or portion of the
Asset. Liquidity Events involve the sale of the Asset or the sale or refinancing
of any property directly or indirectly owned by Borrower or any other capital
event which result in cash distributions to Borrower pursuant to its ownership
rights related to the Asset.
6.2 Timing and Amount of Payment. Within three (3) days of its
receipt of any proceeds resulting from a Capital Transaction, Borrower shall pay
Lender an amount which equals one hundred and ten percent (110%) of the Funding
(or proportionate share thereof) relating to the Capital Transaction Asset (or
portion thereof), except in the circumstance of a refinancing of a property
directly or indirectly owned by Borrower, in which case Borrower shall pay
Lender the lesser of (a) one hundred and ten percent (110%) of the Funding (or
proportionate share thereof) originally related to the Capital Transaction Asset
(or portion thereof) or (b) one hundred percent (100%) of proceeds received by
Borrower attributable to the Capital Transaction.
7. Joint and Several Liability. The liability hereunder of all
individuals and entities comprising Borrower shall be joint and several.
8. Application of Payments. Payments received by Lender from Borrower
shall be applied in accordance with the Agreement.
9. Business Purpose. Borrower represents and warrants to Lender that
Borrower shall use the proceeds of this Note exclusively for commercial and
business purposes, and that Borrower shall use none of the proceeds of this Note
for personal, family or household purposes.
10. Acceleration. Upon the occurrence of an Event of Default in
Borrower's obligations to pay any amount payable hereunder as and when due or
any other Event of Default under this Note or under any of the other Loan
Documents, Lender may declare, at its sole option and without notice to any
party, the entire indebtedness evidenced hereby immediately due and payable in
full. Failure to exercise this option or any other right Lender may have shall
not constitute a waiver of the right to exercise such option or any other right
in the event of any subsequent Event of Default.
11. Costs and Fees of Collection. Borrower and every other person or
entity at any time liable for the payment of the indebtedness evidenced hereby
shall also be liable for all costs, expenses and fees incurred by Lender in
collecting any amounts owing hereunder, including reasonable attorneys' fees.
Any judgment recovered by Lender shall bear interest at the Default Rate.
3
12. Waiver of Presentment. Borrower and every other person or entity at
any time liable for the payment of the indebtedness evidenced hereby waive
diligence, demand, presentment for payment, notice of protest, and notice of
nonpayment of this Note. Every such person or entity further consents to any
extension of the time of payment hereof or other modification of the terms of
payment of this Note, the release of all or any part of the security for this
Note, or the release of any party liable for the payment of the indebtedness
evidenced hereby at any time and from time to time for any reason whatsoever.
Any such extension or release may be made without notice to any of such persons
or entities and without discharging their liability.
13. No Waiver/Remedies Cumulative. If Lender delays in exercising or
fails to exercise any of its rights under this Note, that delay or failure shall
not constitute a waiver of any of Lender's rights, or of any breach, default or
failure of condition of or under this Note. No waiver by Lender of any of its
rights, or of any such breach, default or failure of condition shall be
effective unless the waiver is expressly stated in a writing signed by Lender.
All of Lender's remedies in connection with this Note or under applicable law
shall be cumulative, and Lender's exercise of any one or more of those remedies
shall not constitute an election of remedies.
14. Applicable Law. This Note is made with reference to and is to be
construed in accordance with the laws of the State of Washington, without regard
to that state's choice of law rules.
DATED as the day and year first above written,
BORROWER: SP Millennium L.L.C.
By: _________________________________
4